Property Section – September 2012

• What Investors need to know about Online Loans
• Median Price on the Way Up
• The Other Important ‘L’ Word in Real Estate
• Understanding the Power of Offset Accounts
• Should a Tenant be Compensated for Urgent Repairs?
• Suburb Snapshot: Craigie

What Investors need to know about Online Loans

Online home loans seem to have many of the features of regular home loans, but there are a number of potential drawbacks that borrowers – especially investors – need to be aware of.

These days it seems you can get almost anything online, from the latest gadgets to this season’s must-have fashion accessory. And now you can even pick yourself up a home loan.

Online home loans have been around for a few years now but it’s only recently that borrowers have started  to take notice of them. With low rates, minimal fees and the apparent convenience of an online application process, it’s easy to see how these products could be so eye-catching.

Online home loans seem to have many of the features of regular home loans, such as the ability to make additional repayments or pay interest only, but there are a number of potential drawbacks that borrowers – especially investors – need to aware of.

Let’s start off with a biggie. The reason some people have been attracted to these loans is because of the cheap rate offered. Often when businesses try to build market share they offer discounts for a while. However when you read the fine print of most lender loan contracts, the lenders can effectively change interest rates to whatever they want when they want. You might put in a lot of work and effort only to find that your rate ends up being the same as everyone else’s. Unless a on-line lender is willing to put in writing a guarantee to you that they will always be cheaper than everyone else and will compensate you if they aren’t then the allure of the cheap rate may fade quickly.

To build a property portfolio requires proper credit advice on how to structure your loans and which lenders are most suitable to help you achieve your goals. An on-line lender will only be offering their own products which means the products from other lenders in the market won’t be considered. Also its likely that on-line lenders will not tell you how to structure loans which is the advice an investor needs to build their property portfolio. A professional Broker who is experienced in dealing with investors is able to access a wide variety of lenders and give you the structuring advice you need to build your property portfolio.

Online home loans typically don’t offer offset accounts, which are one of my favourite loan features. Offset accounts allow you to use any cash you have available to offset the interest on your loan, while giving you easy access to your money. Disciplined borrowers who funnel all their money, such as their wages and rental income, into an offset account can end up saving tens of thousands of dollars of interest over the period of the loan (you can read more about offset accounts later in our newsletter).  

Many online home loans do offer a redraw facility, allowing you to redraw any additional repayments you have made. However, a redraw facility, unlike an offset account can cause problems when it comes time to submit a tax return. If you are redrawing money from an investment loan and using it for personal use (e.g. paying your phone or credit card bill, buying a car) you can jeopardise the deductibility of your interest payments. With regular use of a redraw facility, you could find that a large amount of interest you are paying on your investment loan is no longer tax deductible.

An offset account offers a much cleaner solution for investors who use their money for both investment and personal use. The money in an offset account can be used for any purpose without affecting the deductibility of the interest paid on the investment loan it is attached to.

With redraw facilities it can take 2-3 days for money to be made available, whereas an offset account is like an everyday transaction account with instant access to your money via an ATM card or the web.

Another drawback of online home loans is that you have to do a lot of the research yourself. Home loans are complex products and, although there is an abundance of information out there, few people would be confident to do their own detailed comparison. Some online home loans do offer telephone hotlines and access to online manuals and FAQ pages, but these can only be of certain help and don’t provide a comparison between different lenders.

Using the services of an experienced finance broker will not only help to make sure you are choosing the best product for your needs, but the broker will also lead you step-by-step through the application maze. Even more importantly, a broker will be able to consider your long terms plans. An online lender is not going to review your loans and goal regularly. The wrong loan could severely hinder your future investment plans or prove costly should your circumstances change. While Brokers aren’t tax advisers, a good Broker will be aware of the tax implications of your transaction. An online lender is not likely to consider that when providing a loan.

The idea of completing a home loan application online and alone could also be very intimidating. Think about all the paperwork that would be required, such as pay slips, proof of rental income, bank statements, details of other loans, tax assessments, and credit card statements just to name a few. Any mistake in the application could prove costly, including missing the loan settlement date which could mean penalties or worse still forfeiting your deposit and losing the property! First home owners would also need to handle their own FHOG application with an online home loan which most would not know how to complete.

A few other things to consider about online home loans is that most only go up to 80% LVR, so borrowers will need at least a 20% deposit. They can also be quite inflexible making it difficult to change products or switch the security in the case when you are buying and selling.

Choosing a home loan or investment loan could be one of the biggest financial decisions of your life. For people who have a lot of time on their hands and a very simple structure, on-line loans may be of use. However for a person looking to build a property portfolio, a specialist Broker is a vital part of your team that you can’t do without.

Median Price on the Way Up

Preliminary data from the Real Estate Institute of WA confirm what many people already suspect, that Perth property prices may be on the way up.

The metropolitan median price has increased by 3.2% this year to $480,000, but is still below the June 2010 peak of $505,000.

REIWA president David Airey said the market was showing signs of normalising and that the industry was heartened by a 20% jump in sales over the past 12 months.

“There is no question that the market has bottomed out,” Mr Airey said.

“People who were looking to pick the bottom have missed it.”

There has been a recent drop in the number of homes on the market, from 12,000 at the end of June to below 11,500. And the average time on the market has also fallen from 79 days to 73 days in the June quarter. 

The Other Important ‘L’ Word in Real Estate

The layout of a property plays an enormous role in determining demand from renters and buyers, and therefore the value of your investment. Just think about how much effort people put into designing a floor plan for a new home.

Buying real estate is all about location, right? If you choose the right location, you’re well on your way to success. But while location is an important consideration, there is another ‘L’ word that can also affect the success of your investment: layout.

The layout of a property plays an enormous role in determining demand from renters and buyers, and therefore the value of your investment. Just think about how much effort people put into designing a floor plan for a new home and it’s easy to see why layout is such an important consideration. 

A property’s layout involves the size and positioning of rooms, and the overall flow of the property. A good layout makes living more convenient and enjoyable, and a bad one can easily make a property feel cramped and uninviting. Have you ever heard someone walk into a property and say “It doesn’t feel right”? While they might not always be able to put their finger on what’s wrong, chances are they are talking about the layout.

It can be very difficult and expensive to correct a poor layout, especially when it involves moving load-bearing walls, so it’s important to carefully consider layout when buying a property. So what makes a good or bad layout? A lot of it comes down to fashion trends and personal tastes, but some preferences are pretty universal.   

For instance, a lot of people prefer an open-plan layout where the kitchen, dining and living rooms are combined or at least very close together. People like to be able to be in the kitchen and still be connected to what’s happening in the rest of the house.

Something most people don’t typically like is where there is a bathroom or bedroom coming directly off a main living area, without some sort of privacy screening or corridor. Similarly, people don’t like it when the front entrance of a property opens directly into a living area, without some sort of buffer zone.

For some layout options, preferences are more split. For instance, some people prefer the master bedroom to be separated from the other bedrooms, but families with young children may prefer the alternative. In this case, the best layout depends on the particular market for the property.

No property has a perfect layout so when searching for a property there will always be compromises to be made. The key is to try to choose properties with layouts that appeal to a wide range of potential tenants and buyers.

When it comes to evaluating layouts, be aware that internet listings can be very misleading, even when you have the benefit of a floor plan. They don’t give you an accurate indication of size, space and flow. There is really no substitute for walking through a property with an expert eye for what to look for and what to avoid. That’s where a skilled buyer’s agent becomes invaluable. 

Understanding the Power of Offset Accounts

An offset account looks like a regular everyday bank account and even operates like one, but there is one massive difference.

Most people would have heard of offset accounts, but only a few fully understand how valuable they can be. An offset account looks like a regular everyday bank account and even operates like one, but there is one significant difference. It is linked to a home or investment loan and any money in the account will automatically reduce the amount of interest payable on the loan and therefore help the borrower to potentially pay off the loan and build equity quicker.   

It may help to look at a simplified example. Let’s say you have a loan of $350,000 and $50,000 sitting in an offset account. The interest on your loan would be calculated on $300,000 not $350,000, just as if you had deposited the money directly in the loan. If you are paying principal and interest on the loan, your repayments would stay the same, but a greater proportion of your repayments would go towards paying down the loan principal. If you are paying only interest on the loan, your interest payments would be calculated on $300,000, the difference between your loan balance and the balance of your offset account.  

Here’s another way to think about it. Whatever interest rate you are paying on your loan, you are essentially earning that same rate of interest on the money in your offset account. If you had put that money in a regular savings account rather than an offset account, not only would your interest rate be lower but any interest earned on your savings would most likely be taxed. Savings made from an offset account are not considered interest and therefore aren’t taxed.

It’s clear that an offset can help you to pay off your loan much faster, especially when you deposit any available cash into the account and leave it there as long as possible (remember interest is generally calculated daily, so every dollar and every day counts).

Some people will have all their income (wages, rental income) paid into the offset account and use a credit card to cover all their living expenses. They will then pay off the credit card at the end of the interest free period, to ensure their cash is working for them as much as possible. Strategies like this can end up knocking ten years off the term of a loan and save the borrower tens of thousands of dollars, if not hundreds of thousands.

On the surface, it might seem that a free redraw facility on a loan is just as good as an offset account, but there are key differences. If the loan is for investment purposes and the interest is tax deductible, withdrawing money from the loan using a redraw facility can cause tax problems, especially when the money is used for personal use. If you make extra repayments into the loan and then redraw the funds at a later date, that portion of the loan may no longer be tax deductible and the problem can get worse with every redraw.

With an offset account, which is separate from the loan, you can use funds freely for personal or investment use without worrying about the tax deductibility of the interest payments. Another disadvantage of a redraw facility is that it can take 2-3 days for the money to be made available, whereas an offset account is just like a regular bank account with instant access via an ATM card, cheque book or online banking.

It’s true that lenders generally charge a monthly or annual fee for the privilege of an offset account, but, if the account is used properly, any fees are likely to be insignificant compared to the massive benefits that can be gained.

Should a Tenant be Compensated for Urgent Repairs?

Dealing with repairs is a regular part of owning an investment property. But the issue of urgent repairs is an area that is often misunderstood by both owners and tenants, potentially leading to messy disputes. One of the most common disputes involves whether or not a tenant can receive compensation for urgent repairs performed without the owner’s knowledge.

Urgent repairs tend to be more expensive than regular repairs due to  the after-hours call-out rates charged by most tradespeople and the lack of time to shop around for the best quote. The main problem with urgent repairs arises from the fact that people have different definitions of what is “urgent” and so conflicts can easily arise and even end up in court.

Certain circumstances are clearly more urgent than others, like a leaking sewerage system or major electricity concern that could cause serious injury. Generally, if the problem is likely to cause major injury, property damage or real inconvenience to the tenant then an urgent repair is warranted.

But other situations are not so clear cut. For example, does a broken hot water system require an urgent repair? Some may think so, others may not. Let’s say it is a chilly winter’s evening and a tenant arrives home cold and damp after getting caught in the rain. Looking forward to a nice hot shower the tenant discovers that the hot water system isn’t working and so decides to call for an after-hours repair and subsequently pays the bill. The tenant, who didn’t cause the problem, believes the owner should reimburse the expense, but the owner isn’t happy about paying the inflated cost of the after-hour repair when it could have easily been performed more cheaply the following day.    

What the tenant should have done in this situation is call the managing agent to seek clarification about the matter of compensation before ordering the repair. However, it might not always be possible to reach the managing agent, so it’s easy to see how conflicts can arise.

Another reason disputes arise is that there may be differences between what it says in a particular Tenancy Agreement compared to the Residential Tenancies Act 1987. A tenant who is seeking compensation for an urgent repair may turn to the Act which does in fact state that the owner must compensate the tenant for reasonable expenses under certain urgent circumstances.

However, this part of the Act is often legally modified in many tenancy agreements, including the standard one prepared by REIWA, so that tenants must first receive permission by the owner or managing agent before any repair can be ordered.

It’s easy to see that if urgent repairs are not dealt with in a proper fashion, the relationship between tenant and owner can become severely strained. This is where using a professional property manager will help avoid these situations arising by ensuring all parties understand their responsibilities at the beginning of the tenancy, and also by having good relationships with various tradespeople. And if disputes do occur, a property manager is in a better position to liaise with both the tenant and owner and try and mediate a suitable outcome.

It’s worth noting that the Residential Tenancies Act in WA and supporting regulations are to be changed in late 2012 or early 2013 to give clarity to what is an urgent repair and what isn’t.

Suburb Snapshot: Craigie

Craigie has generally outperformed the wider Perth market, with an annual average growth of 12% over the past 10 years (compared to 10.2% for Perth), and it should continue to deliver above average returns to investors.

Developed in the 1970s, Craigie is a northern coastal suburb situated 22km from the Perth CBD and around 4km from the Joondalup City Centre. It neighbours the premium suburb of Kallaroo to the west, Beldon to the north, Woodvale to the east and Padbury to the south.

Craigie has an abundance of parks & reserves and offers residents easy access to a major shopping centre (Whitford City), and a popular leisure centre within the suburb. The suburb also has its own shopping and medical plaza, as well as a popular tavern. Transport in and out of the suburb is a breeze with direct access to the Mitchell Freeway and 2 train stations.

The suburb is predominantly made up of old 3 bedroom houses on large blocks, which typically sell in the low to mid $400,000’s depending on condition and location. Vacancy rates are generally very low with a 3 bedroom house renting for around $380 per week.

A few years ago, the City of Joondalup prepared a draft Local Housing Strategy, in which a large part of Craigie, the entire western side of Eddystone Avenue, was identified as being suitable for higher residential densities. The strategy could see most of the area obtain a dual zoning of R20/R30, except the southern end closest to Whitford City Shopping centre which could obtain a dual zoning of R20/R40.

In February of 2011, Council resolved to adopt the strategy and forward it to the Western Australian Planning Commission (WAPC) for endorsement. It is anticipated that the endorsement of the strategy by the WAPC will be finalised sometime between 2013 and 2016. It is only then can landowners apply for development or subdivision approval.

There is also a development in the later stages of planning for the former site of Craigie High School. It’s an urban renewal project covering over 10 hectares and could see the development of up to 132 dwellings. It will also include public open space and an associated road network.

The WAPC and City of Joondalup have both approved the structure plan and in April of this year, a Subdivision Plan was submitted to WAPC for approval. Civil works are expected to commence in early 2013 and the first round of lots should go on sale in late 2013 with lot sizes ranging from 250 to 500 square metres.

Craigie has generally outperformed the wider Perth market, with an annual average growth of 12% over the past 10 years (compared to 10.2% for Perth), and it should continue to deliver above average returns to investors. This is helped by the fact that it is one of the few remaining affordable suburbs within 2km of pristine beaches, included the popular Mullaloo Beach.   

With an older housing stock that is being renovated or rebuilt, the proposed rezoning, and a massive new residential development in final stages of planning, the area will see significant revitalisation over the coming years. This should further increase its appeal to buyers and renters.

Growth rate (1 year average)           -3.5%

Growth rate (5 year average)             1.8%

Growth rate (10 year average)            12%

Population                                      5,602

Median age of residents                      34

Median weekly household income $1,316

Percentage of rentals                      24.2%

Source: REIWA.com.au, July 2012; ABS, July 2012 

The WA Investor’s Guide to the Latest Census Data

What does the latest census tell us about growth in WA and how the state has performed compared to the rest of the country? Are the foundations set for future price growth?    

The first round of data has recently been released from the 2011 census and we now better understand who we are, how we have changed since the last census in 2006 and how we compare to the rest of the country. For property investors focused on the WA market, the figures make very interesting reading.

Most property investors understand the importance of population growth for driving the demand for housing, and, in this area, WA is in a league of its own. The resident population of WA is now 2,239,169 – up from 1,959,086 in 2006. This is an increase of 14.3 per cent, the same growth recorded for the Perth metropolitan area.

The rate of WA’s population growth is particularly large when you consider that it seems to be accelerating.  After growth of 2.1 per cent in 2010, the 2011 calendar year saw the population grow by a whopping 2.9 per cent. This is more than twice the national average of 1.4 per cent and miles ahead of Queensland (1.5 per cent), another resource-rich state. What’s incredible is that despite Queensland having a population almost twice that of WA, our population increased by more people – the first time in history this has happened.

In fact, of the 20 fastest growing local government areas (with more than 1,000 people) in Australia, 17 of them are in WA including 9 out of the top 10!

The major areas of population growth are concentrated on the fringes of the city and rural areas of Western Australia, where there is plenty of land to develop. According to the latest census data, the local government area with the biggest growth in WA is the City of Wanneroo, which has seen an increase of 41,136 people or 37.1 per cent.

Property investors should be aware that while population growth is important for capital growth, population hotspots don’t necessarily make good investment candidates. The reason is that these areas tend to have a ready supply of available land, which has the effect of containing prices. We almost always invest in established areas of Perth for our clients that have a very limited potential supply of new properties.

Along with our incredible population growth, rents have also soared in WA.  Over the past five years, the median weekly rent has increased to $300 from $170 in 2006, a jump of 76.5 per cent. Compare this to the national growth of 49.2 per cent and it gives you some idea of the pressures on the WA market.

Some might assume that the colossal rental growth in WA was due to the extraordinary rents for property in the north-west of our state. However, it’s easy to dismiss this idea when you look at what has happened in Perth. The median weekly rent in Perth has increased over the past five years to $320 from $180 in 2006, which is an increase of 77.8 per cent.

Incomes, which also play a role in the demand for property, have grown as well since the last census. Median total family income has increased from $1,290 per week to $1,781, equal to 38 per cent growth.

The figures from the latest census definitely make encouraging reading for any investors focused on the WA and particularly the Perth market. While many were expecting WA to lead the nation in a number of key indicators, few anticipated just how much the disparity would be with the rest of the country.

I believe the future definitely looks bright for the real estate market. With our accelerating population growth, improving affordability, an undersupply of new housing and an extremely tight rental market, it won’t be long before we lead the nation in another area – growth in property prices.

Perth Set to Become the Leading Property Market in Australia

The report ‘Residential Property Prospects 2012-2015’ released by BIS Shrapnel at the end of June is forecasting Perth to experience 22 per cent growth in the median house price by 2015 to become the strongest performing capital city in Australia.

WA is set to record the strongest growth in property prices over coming years, ahead of all other states and territories. The latest report released by BIS Shrapnel, Residential Property Prospects 2012-2015, reports that properties in the resource-rich states of Western Australia, Queensland and the Northern Territory are already showing signs of recovery and are set to improve further over the next three years.

Perth is predicted to experience the strongest growth in median house prices of 22 per cent by 2015, about 7 per cent growth each year with compound increases. Brisbane is forecast to closely follow at 20 per cent, Sydney at 17 per cent and Darwin at 15 per cent. Lower interest rates and accelerated population growth are indicators that conditions are starting to improve in these capital cities. 

Western Australia’s strong fundamentals will underpin the growth phase, according to BIS Shrapnel senior manager and author of the report, Angie Zigomanis.

“With unemployment in the state already leading the nation at 3.8 per cent in March 2012 and economic and income growth to continue to strengthen, the first stages of a turnaround should appear in 2012/13 before stronger price growth emerges in 2013/14 and 2014/15 as economic growth approaches a peak”, he said. 

“If you’re in a position to get into the market, the next 12 months presents a period where buyers will still be in a better negotiating position, after this it will then become more difficult for buyers,” he said.

The report, however, predicts a two-tiered national market with the remaining states and territories lagging behind with only minor growth due to underperforming economies and excess supply.   

Property Management – Cheap is Not Always Cheerful

Many agencies are offering cut-price property management fees and some investors are being tempted. But be warned; choosing a property manager based on the lowest fees comes with risks and, for many, may end up being a costly mistake. 

Property management is an important part of keeping your investment property safe and secure, so it pays to choose your property manager carefully. But with a number of agencies trying to lure investors with ultra-cheap management rates, some investors are basing their decision on fees alone, which could end up proving costly.

When it comes to property management, as with a lot of things in life, you often get what you pay for. While a very low management rate may seem attractive, most investors soon learn that it costs them more in the long run.

Agencies that offer discount rates usually use these rates as bait to attract new business, then sting investors with many extra and overpriced services. Once you add these additional items into the mix, the cheap rate isn’t so cheap anymore and owners end up paying the same price for a budget agency than they would have with a superior one. Worse still, if owners don’t opt for the extra services, such as regular inspections, the condition of the property may suffer.

Agencies that offer cheap rates have to make many sacrifices to make the business profitable. One area where this is often apparent is in the number of properties serviced by each property manager. Property managers in these agencies are often inundated looking after hundreds of properties and are too busy to properly service any individual property. This leads to high staff turnover.

The other area sacrificed is in staff training. With profitability wafer-thin, these agencies cannot provide their staff with the ongoing training and education needed to keep them up-to-date with legislation and changing market conditions. This too can contribute to higher staff turnover and the staff’s lack of knowledge can leave owners out of pocket.

At the end of the day, it is not feasible to expect a high quality service with all the necessary inclusions for next to nothing. Owners need to ask themselves, are we willing to risk the security and performance of one of our most valuable assets for the sake of potentially saving a couple of hundred dollars a year?

Property Tax Tips: Calculating Depreciation

When you purchase a property, how do you figure out what price you paid for the depreciable items (e.g. carpet, appliances etc)? There are a number of options.

Firstly you can specify it in the contract (for example, the purchase price of $450,000 includes $1,000 for appliances, $3,000 for carpets etc). You cannot dramatically over inflate the figures (e.g. say $20,000 for appliances and $30,000 for carpets) as this will not be accepted. In addition, the seller may have negative tax consequences from including these figures in the contract, so normally prices for depreciable items are not included in the contract. Also, a buyer may not be aware of all the items they can depreciate.

Secondly you can make your own reasonable estimate of the value of the assets included in the purchase price. The ATO says that any reasonable value should reflect the age and condition of the asset (i.e. if the stove was 15 years old, you cannot use a brand new replacement value as the estimate). The difficulty for most people is that they wouldn’t know everything that is available for depreciation and would miss some items if they did it themselves. Also if you are audited you run the risk that your own estimates will be highly scrutinised.

The third and most common option is to obtain an independent valuer to value the items purchased for the purposes of depreciation. The ATO has said they will accept reports from Quantity Surveyors as being satisfactory evidence for valuations. Depreciation is a complicated area and most people need the help of their accountant or a depreciation consultant to claim the correct amounts.

Finance: Getting Past 1 Investment Property

Many people ask us why the average investor doesn’t get past 1 investment property. 

Research done some time ago by the Australian Bureau of Statistics shows that most investors only purchase one.

• 93.5 % of people do not own any investment property;
• 4.0% own one investment property;
• 1.49% own 2-4 investment properties; and
• Only 0.1% own 5 or more properties.

In recent years, these figures have changed, but still the vast majority of people do not own a substantial number of investment properties and very few own 5 or more investment properties.

If you understand the mindset and strategy of the average investor, then you will know why.

The average investor will usually put down 20% as a deposit on a property.  They decide to start saving for an investment property and this may take many years of saving (we will assume 5 years in this example).  In addition, they will also require funds for stamp duty, which can be as high as 5% of the purchase price, and also borrowing expenses, (fees and charges, and stamp duty on the mortgage).

That purchaser will usually pay market value for the property, then rent the property out and wait for capital growth to generate equity.  Typical investors don’t understand what drives capital growth and property profits, and they will usually select properties with average capital growth rates.

In the first year, the purchaser may only just break even, as the price of the property may rise enough to cover the stamp duty on purchase.  In many cases where capital growth is moderate, it may be 2 years before a property has increased enough in value for the purchaser to cover the costs of stamp duty and other settlement and borrowing costs.

In the third year the purchaser finally starts to make some profit.  The average investor has waited 7 years from the time of deciding to purchase an investment property to actually generating any profit!

In order to buy another property, the purchaser normally needs to generate another 20% equity.  In a moderate growth area, this may take another 5 years or more.  They will only be in a position to buy a second investment property 12 years after first making that decision to invest.

In a large percentage of cases, the average investor will get dissatisfied with the returns on the property and not even get to the stage of considering a second property investment.  Many will sell within the first 5 years and re-join the ranks of people who own no investment property.

Smart investors understand that there are ways to speed up the process. If you understand how to access your equity to purchase more property and purchase high growth properties, you can build a substantial property portfolio much more quickly than you think.

Property Acquisitions: Stale Property

When a property has been sitting on the market for over a month it begins to go ‘stale’. Once this occurs people will start to think that there may be problems with the property. Eventually the property will be classed as a lemon and it will become more difficult to sell, but it could be a great time to buy.

There are 15 strategies to purchase property below market value. One of these is purchasing stale properties.

In many cases this happens because the owner has listed the property for more than it is worth. Even as the owner drops the price, the perception that there are problems with the property will still remain.

After 3 months on the market the property is now considered stale. The agent would have likely lost enthusiasm and the owner will have become despondent.

The three month mark is a good time for the bargain hunter to get to work. If you have a stale property and a highly motivated vendor, these are the perfect components to get you a property at a significant discount to market value. It’s one of the many methodologies we use to find great properties at good prices.